TaxTMI 
TaxTMI 
2026 (7) TMI 1382
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....s no addition made in the assessment order, but income computation started from income as per Intimation u/s 143(1) (a) of the act, assessee is agitating those addition as assessee did not file appeal against the intimation. 3. The necessary facts show that assessee is a charitable trust registered u/s. 12A of the Act. For the impugned AY 2012-13 return of income was filed on 1.10.2012 at the total income of NIL. Subsequently survey u/s. 133A of the Act was conducted at the campus of the assessee on 14.12.2019. Subsequently notice u/s. 148 was issued to the assessee on 18.3.2019 against which the assessee vide letter dated 23.3.2019 reiterated the original return filed. 4. The facts show that assessee incurred certain expenses towards construction of the Boys & Girls Hostels. The AO referred the matter to the DVO u/s. 142A to ascertain the cost of construction. The DVO submitted report on 27.10.2020. According to that report, addition u/s. 69B of the Act was made to the total income of the assessee of Rs. 3,59,917. Appeal was preferred before the ld. CIT(A) who confirmed the addition. 5. Identical additions on the basis of valuation report were made in the respective asses....
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....,738 2017-18 4,06,76,210 4,02,29,132 4,47,078 29,15,39,332 28,83,34,980 32,04,352 9. The ld. CIT(A) issued 10 notices to the assessee which remained unresponded. The ld. CIT(A) referred to the assessment order and Statement of Facts filed before him and based on this, he held that assessee trust failed to substantiate and explain the difference between the valuation adopted by the DVO and the cost of construction shown by the assessee and therefore the addition was confirmed. 10. The assessee in appeals before us for all these assessment years. The claim of the assessee is that addition is made in the hands of the assessee merely on the basis of cost of construction estimated by the DVO. In the assessment proceedings, there is no reference of finding by the ld. AO that the cost of construction incurred by the assessee of the Boys & Girls Hostel is not supported by vouchers and bills. Further merely because some of the vouchers are self made, the ld. AO could not trigger a reference to the DVO as such. It was further stated that even otherwise the valuation report of the DVO is also an estimate. Unless the facts on record and cost of construction....
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....ssee, the addition merely on the basis of opinion of the ld. DVO that too which is approximately only 10% could not have been made in the hands of the appellant trust. Both the ld. lower authorities have looked into only the difference between the valuation report and the actual cost of construction incurred by the assessee. Even the ld. DVO has made the addition only on the basis of applicable Plinth Area Rate and adopting cost of construction as per Cost Inflation Index. In para 6, the ld. AO has himself stated that in absence of proper detail, Plinth Area Rate and Cost Index Method of Valuation was adopted. No doubt there cannot be any issue on the valuation made by the DVO. However, looking at the totality of the facts that the construction activity continued for 5 years of Boys & Girls Hostels, during the course of search at the premises of trustees no evidences and unaccounted expenditure related to Boys & Girls Hostel was found. Further as the difference between the cost of construction incurred by the assessee and the cost of construction estimated by the ld. DVO is merely 10.99%, for the reason that actual cost of construction could not have been replaced by the opinion of....
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....ents from the DVO with regard to suppression of material facts by the assessee which would amount to undisclosed income. The Managing Partner of the Firm is primarily a Jeweller by profession, constituted a Firm to take up the work of construction of the buildings. The difference in the cost of construction cannot constitute undisclosed income for the block period. On verification of the revised report submitted by the DVO, the differences between the valuation of the assessee-Firm and the DVO is less than 15%. There is no specific finding by the Assessing Officer with regard to any concealment. Further, there was no material found during the search indicating that there were expenses incurred on construction by the assessee that were not recorded in the books of accounts. In the absence of any seized material and solely on the basis of the report of the DVO, there cannot be any finding with regard to the undisclosed income. No material has been found at the time of search for initiating proceedings under Section 158-BD of the Act. Solely on the basis of the Valuation report, block assessment cannot be made. Further, it is relevant to mention that the assessee-Firm came into existe....
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.... income insofar as the building is concerned was solely made on the basis of the report of DVO as obtained by the search party. The report of the DVO does not constitute materials or information relatable to the search. Such a view have been recorded in the judgments of the Madhya Pradesh High Court in CIT v. Khushlal Chand Nirmal Kumar (supra) and Delhi High Court in CIT v. Manoj Jain (supra) and CIT v. Ashok Khetrapal (supra). While expressing our respectful agreement with the said views, it has to be held that the determination of undisclosed income of Rs. 40,04,359/- in respect of the building in question being solely on the basis of the report of the DVO was rightly interfered with by the learned Tribunal. The said conclusion of the learned Tribunal, therefore, will not be open to interference." 11. The Appellate Authority as well as the Tribunal after considering the matter in detail corrected the mistake committed by the Assessing Officer. We find, no infirmity or irregularity in the order passed by the Appellate Authority and the Tribunal. Hence, appeal filed by the revenue is liable to be dismissed. The substantial questions of law framed in this appeal are held a....